Kiwbank's mortgage market share and profits keep growing

Kiwibank's mortgage book growth moderated slightly in the September quarter but was still well in excess of its market share and its profitability continued to grow.

Tuesday, December 8th 2009, 5:00AM

by Jenny Ruth

Kiwibank's latest general disclosure statement (GDS) shows its mortgage book grew $614 million in the three months ended September to $8.41 billion. The book grew $792 million in the June quarter while in the year ended September, the mortgage book grew $2.88 billion.

While the Reserve Bank's figures no longer correspond as closely to the data disclosed in banks' GDSs as they used to, until all the banks' documents for the quarter are available, they are the only figures available.

So according to the Reserve Bank's figures, Kiwibank's share of mortgages held by registered banks rose to 5.24% at September 30, up from 4.9% at June 30. Also using those figures, Kiwibank accounted for 40.1% of new lending by registered banks in the September quarter.

Kiwibank's net profit jumped 43.3% to $13.9 million for the September quarter, despite increased charges against profit for bad loans and despite net interest income falling 3.6% to $33.4 million.

The latter was a function of interest income jumping 64% to $283.7 million but interest expense jumping an even greater 81% to $250.4 million.

Kiwibank spokesman Bruce Thompson says those large increases were caused partly by balance sheet growth and partly by the methodology used to calculate the effect of interest rate swaps.

"These effects have been netted down in the GDS and, while net interest is consistent, it does make the gross interest income and expense bounce around, making analysis impossible," Thompson says. Underlying net interest income isn't affected by those swaps.

Kiwibank will look at what other banks do and consult its auditors to see if there's a better way to report these matters.

Charges against profit for bad loans rose to $5.5 million compared with $4.6 million in the June quarter and $700,000 million in the September 2008.

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